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Bracing for a seismic shift to smaller, lighter ‘sippers’

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The battle for market share continues to rage in the automotive arena. But smaller vehicles might have a bigger, near-term impact on metal producers than new alternative power trains, industry insiders suggest.

Whether a steel zealot or an aluminum ally, chances are that producers are seeing less metal go into the average car or truck. And that's true even if the overall marketshare of a specific metal is holding ground or even gaining slightly.

In fact, the big question might not be what metals go into the current generation of hybrids, because their materials make-up isn't necessarily radically different from traditional cars and trucks. Instead, the real issue might be what metals (or plastics and composites) next-generation vehicles such as General Motor Corp.'s plug-in electric Chevrolet Volt will ultimately settle on, some metal executives said.

For steel bar producers, hybrids currently on the road don't look very different from vehicles powered by traditional gasoline engines, according to executives at special bar quality steel producer Gerdau Macsteel, Jackson, Mich. "The hybrids that are on the ground are pretty much business as usual," said Dick Grimes, Gerdau Macsteel's manager of technical service and product development. "The axle doesn't really know whether it's being driven by a hybrid, a hybrid-electric or a diesel."

The crux of the problem isn't really a potential threat from alternative metals in hybrids, it's how to deal with the consumer shift away from big pickups and sport utility vehicles (SUVs) toward smaller, more fuel-efficient cars, company executives said. While a truck or SUV might contain about 350 pounds of parts made from steel bar, a car might have only 250 pounds, they said.

"We are feeling more pressure from the downsizing. If you don't buy the (Chevrolet) Tahoe (SUV) and you buy the (Toyota) Corolla or Prius, that's where we lose more significantly," Grimes said.

Even aluminum—steel's biggest rival in the auto metals sector—is feeling the heat from the rapid shift to smaller cars and trucks.

Today, the average car contains about 9 percent or about 327 pounds of aluminum. That number is expected to grow to 10.5 percent within the next five years, according to Doug Richman, vice president of engineering and technology at Kaiser Aluminum Corp., Foothill Ranch, Calif. He noted that aluminum has surplanted cast iron in 90 percent of cylinder heads and 60 percent of engine blocks, but automakers are downsizing to smaller, more fuel-efficient engines. That means vehicles that had eight-cylinder engines are going down to six, and those that had six-cylinder engines, to four.

"The mass of the block is being downsized," Richman said. "If it weren't for new applications, the percentage of aluminum could be lower next year."

Even so, aluminum continues to gain traction in other applications, especially in body closures like hoods, trunk lids and tailgates, Richman said. The lightweight metal also is seeing strong growth in cast or forged aluminum control arms and in structures such as instrument panel and radiator supports, engine cradles and bumpers. That's in part because new fuel-economy regulations have created a greater need for lightweight structures than ever before, especially to offset the heavy weight of hybrid batteries, he said.

Switching from steel to aluminum has always been a cost-benefit decision, and with the cost of operating a vehiclerising, the equation is tilting in aluminum's favor, Richman said. "Aluminum is the natural ally of motion."

But it's hardly time for the aluminum industry to pop the champagne cork and declare victory over steel, he said. "It's not like aluminum is going to be 25 percent of the vehicle. Ferrous products are the dominant material, and we don't anticipate that's going to change in the next five to 10 years." Aluminum marketers might like to paint a rosier picture, but the holy grail—the high-volume aluminum-intensive body—is "not around the corner," Richman said.

Steel is most threatened by alternatives in closures such as trunks and hoods—if original equipment manufacturers are willing to pay the high price penalty for alternative metals, said Jody Shaw, manager of technical marketing and product research at U.S. Steel Corp., Pittsburgh.

At the moment, however, the industry is perhaps more focused on what metals next-generation alternative vehicles like the Chevrolet Volt and concept hydrogen fuel cell cars like the GM Sequel and the Honda FCX Clarity will use. The Volt makes heavy use of plastics while the Sequel and the Clarity prototypes employ a lot of aluminum, Shaw said. When the Volt goes into full production, he speculated that the vehicle likely will use a steel body structure with plastic or composite skin panels.

Many concept vehicles—including GM's first electric car, the EV1—have used alternative materials in the concept stage because a material like plastic makes sense for low volumes. But if and when a prototype enters large-scale production, steel tends to win out, Shaw said. "In doors, chassis and body, steel certainly performs much better than aluminum," in part because the auto industry for decades developed its manufacturing process primarily around steel stampings.

Bracing for the coming hybrid revolution, the steel industry isn't taking anything for granted. Producers are keeping their eyes open for new opportunities, Shaw said. A traditional gasoline engine might be larger than an electric engine, but it also is largely hollow and much less dense. And while an electric motor might be smaller, it presents opportunities for materials such as steel motor laminates, which can be used to power it.

If the nation were to switch to hydrogen-powered cars, steel also would have a good opportunity thanks to all of the steel pipelines and tanks that would be needed to move hydrogen to filling stations and to store it, Shaw said.

Magnesium also expects to get in on the action as new fuel-economy deadlines creep nearer, according to Cameron F. Tissington, vice president of sales and marketing at US Magnesium LLC, Salt Lake City, Utah. "We're certainly in contact with all the players in the industry here in the United States," he said. "And we've seen a lot of interest because of CAFE (corporate average fuel economy standards)."

While interest in magnesium has been policy driven in the United States, it has been rooted more in performance in Europe, he said. Daimler AG, Stuttgart, Germany, builds vehicles with magnesium gear boxes, and some BMW AG vehicles come equipped with aluminum-magnesium bi-metal engines. "We do find that things that happen in Europe and are proven, eventually find application here in North America," Tissington said.

But the problem to date is cost. "A magnesium engine block is going to cost more than a cast iron or even aluminum block," he said. "In many cases, you're going to pay a premium for weight savings." And that means the chances of a cost-benefit analysis coming down in favor of magnesium aren't high for mass-production vehicles in North America. But there are obvious exceptions in components where die-casting can reduce total part costs, such as in instrument panel support beams and front-end radiator assemblies, Tissington said.

"Right now, we're not seeing a lot of new applications coming down the pipeline," he said. "It doesn't mean the interest isn't out there, but it will be a number of years for the new CAFE standards to make an impact." MICHAEL COWDEN

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